The Section 8 housing program provides rental assistance for low-income families. What many people don't realize is that it can also help them buy a house.

Why does the government do that? Under Section 8, qualified families can have a portion of their rent paid through what's called the Housing Choice Voucher Program. The reasoning behind the homeownership program is that, rather than giving that money to a landlord every month, the government might as well allow recipients to use those same funds to buy a home instead.

In many areas, Section 8 recipients can buy a better place to live than they could rent for the same subsidized monthly payment. Homeowners also have a personal stake in the maintenance of the property, so they tend to keep the place up better than subsidized rental units often are. Finally, owing their own home allows them to build equity in an asset that can eventually help them attain a higher standard of living.

Section 8 housing voucher basic requirements

A few misconceptions should be cleared up right off the bat. First, this is not a program that provides a "free house" to the unemployed. Unless participants are elderly or disabled, at least one member of the household must be working full-time. Second, the family must pay part of the monthly housing expenses themselves, a portion equal to 30 percent of their adjusted income. So the merely unemployed are not eligible.

To be eligible, a family can earn no more than 50 percent of the median income of the area in which they reside, adjusted for family size. So if the median income in your area is $50,000, you can earn no more than $25,000 a year to be eligible.

On top of that, program guidelines require that at least 75 percent of the vouchers be allocated to families earning no more than 30 percent of the local median income - so if you're in the 30-50 percent range, you may have difficulty getting accepted.

The voucher programs, both for homebuyers and for rentals, are administered through local public housing agencies (PHAs). To be accepted into the Homeownership Voucher program, you need to be referred by your local PHA. Not all PHAs participate in the program, although most do.

Getting approved can be tough

Even if your family meets the guidelines, this can be a difficult affordable housing program to get into. In recent years, only about 1,000-2,000 families nationally have been accepted into the program each year. On top of that, participating PHAs maintain waiting lists for the program that can be quite lengthy - often several years. Furthermore, the lists may open up to new additions only rarely, and then be closed again after just a few days.

You are not eligible if you are currently receiving Section 8 rental assistance for living in a federally subsidized housing project, but may be eligible if you are receiving Section 8 rental assistance for a non-project unit.

Work and income requirements

The work requirements specify that at least one person in the household be working full-time, defined as a minimum of 30 hours a week. On top of that, there is a minimum income requirement that the adult family members combined earn at least 2,000 times the federal minimum wage each year, currently $7.15 an hour. Done by one person, that would be nearly a full year of 40-hour weeks at minimum wage, the traditional definition of full-time work.

Welfare benefits cannot be including in calculating qualifying family income unless the family qualifies as elderly or disabled.

A different minimum applies for families classified as elderly or disabled. In that case, the minimum annual family income must be no less than 12 times the monthly Supplemental Security Income benefit for a single individual living alone.

As mentioned above, participants must pay a portion of the mortgage and other monthly housing expenses. This amount is typically based on 30 percent of the family's adjusted income. The voucher covers the rest. Covered monthly housing expenses include not only the mortgage, but also property taxes, homeowners' insurance, and allowances to cover utility payments and repairs. Principle and interest costs of loans for major repairs or to make the home accessible for a handicapped family member may be included as well.

You're also responsible for making any down payment required for the mortgage, although many states and localities offer separate down payment assistance programs you may be able to take advantage of. If you can qualify for this program, there's a good chance you'll be eligible for one of those as well.

15-year limit on assistance

A few other things to note. The financial support is not open-ended. In fact, the vouchers will be provided for a maximum of 15 years (10 years if the mortgage term is less than 20 years), unless the head of household is elderly or disabled. So for a standard 30-year mortgage, the homebuyer vouchers will only get you halfway there. At that point, you'll need to be able to take over responsibility for the entire mortgage payment, taxes, insurance and utilities yourself.

You may also be subject to the Federal Recapture Tax if you sell the home at a profit less than nine years after purchasing.

Further information on the HUD Homeownership Voucher program, including links to a list of local public housing agencies, is available from the Department of Housing and Urban Development by clicking the link shown.

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